Employment development in February may sign a hiring increase if the financial system opens once more

Executive Chef Alessandro Pirozzi of Alessa by Chef Pirozzi brings a take-away order to an outside table on Boardwalk on Forest in Laguna Beach, California on Wednesday, January 13, 2021.

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The surprisingly strong employment growth in February suggests that the economy may be at a hinge and on the verge of a hiring boom.

The economy added 379,000 jobs, well above the expected 210,000, with most of them in the leisure and hospitality sectors. This was the hardest hit sector when the economy shut down abruptly a year ago.

Economists say it wouldn’t be surprising if employment growth was at least 500,000 in several months.

Stock futures rose on the report and bond yields rose. The 10-year government bond yield, moving against price, bounced back to a current high of 1.61% before falling back to around 1.57%. The 10 year old started the year just over 0.9%.

“It aligns very well with other economic data we’re seeing,” said Michael Arone, chief investment strategist at State Street Global Advisors.

“The job market lagged and is now catching up,” he said. “It was great to see how much free time and hospitality were gained as the pandemic began to wear off and restrictions were lifted.”

“The numbers are trending in the right direction,” added Arone. “The job market was the only way out. … Spring is just around the corner. You have that and you have the vaccine rollout.”

Green shoots in spring

Strategists expect the economy to grow by about 6% this year, aided by the introduction of vaccines, reopenings and fiscal stimulus.

“I think we’ll see bigger employment numbers in the spring and summer,” said Diane Swonk, chief economist at Grant Thornton. She expects greater profits when people are able to regroup more safely.

“There is still a long way to go given what we’ve lost, but the good news is we should see some strong job gains,” said Swonk.

Economists are optimistic about the recovery, but remain concerned that variants of the virus could slow it down.

The strength of jobs also feeds both sides of the debate over the need for the $ 1.9 trillion stimulus package that is being passed by Parliament and now being scrutinized by the Senate.

Stimulus Package Effects

For Swonk, February data shows that the stimulus package approved in December was necessary to pull the economy out of a rock bottom.

The December job loss has been revised from 227,000 to 306,000. January earnings have been revised from 49,000 to 166,000. Individuals received $ 600 worth of stimulus checks in the first few days of January.

Swonk said the economy is still declining 9.5 million jobs.

The number of leisure and hospitality jobs rose by 355,000 in February, 80% of them in restaurants and drinking establishments. Nevertheless, employment in this area fell by 3.5 million over the course of the year.

The health industry created 46,000 jobs, but health and welfare services fell by 909,000 jobs over the year.

“December was really a train wreck,” said Swonk, noting that there was huge job losses and a sharp drop in consumer spending.

However, the February report points to a turnaround.

“It’s good news,” said Swonk. “It underscores the key role stimuli have played in derailing what may be a more significant downward spiral such as we have seen in other countries abroad.”

“We turned away from what could have been a double dip,” she said.

However, Arone said the market is concerned about the next stimulus package, which will be much larger than December’s $ 900 billion, overheating the economy and causing inflation.

“The economic numbers for the past week or two have been really strong,” he said.

“I think it adds something to the conversation, ‘Do you really need another $ 1.9 trillion?’ Arone said, “We’re going to put more gas on the fire, and that $ 1.9 trillion is what the market is worried about.”

He believes the economy will continue to heal and employment growth will increase.

“I think there is tremendous pent-up demand,” he said. “I think that’s what people have been describing all year long, with very simple monetary policy, very simple financial policy.”

“With the economy reopening, the spread of vaccines and the epidemic behind us, you could see a real economic, labor and economic outbreak [corporate] Revenue for the next nine months or so, “he added.